Social Services Minister Kevin Andrews hailed it as a victory for the government, saying Labor had supported $2.7 billion worth of welfare cuts.

"That's actually success," he said.

However, Treasurer Joe Hockey is now seeking more budget savings to fill the gap caused by the backdown, as well as an extra $630 million for national security agencies and an expected annual bill of around $500 million for military action in Iraq.

While there are suggesting foreign aid spending could be further cut, Foreign Minister Julie Bishop said cabinet hadn't discussed it.

"Foreign aid can be one of the extraordinarily powerful weapons against extremism," he said.

Labor argues if the dumped savings measures were included in the mid-year economic and fiscal outlook, the document would be based on a "fabrication".

Mr Abbott said the government's strategy was on track, citing the passing of the budget appropriation bills, $7.6 billion in foreign aid savings, the budget repair levy on high-income earners and the mining tax-related spending measures.